DETERMINING WEEKS OF SUPPLY AT PEPSICO. Using the PepsiCo data in Example 3, management wants to know the weeks of supply.
APPROACH $\blacktriangleright$ We know that inventory investment is $1.69 billion and that weekly sales equal annual cost of goods sold ($14.2 billion) divided by 52 = $14.2/52 = $.273 billion.

Question

DETERMINING WEEKS OF SUPPLY AT PEPSICO. Using the PepsiCo data in Example 3, management wants to know the weeks of supply.
APPROACH [latex]\blacktriangleright[/latex] We know that inventory investment is $1.69 billion and that weekly sales equal annual cost of goods sold ($14.2 billion) divided by 52 = $14.2/52 = $.273 billion.

Accepted Answer

SOLUTION [latex]\blacktriangleright[/latex] Using Equation (11-3), we compute weeks of supply as:
Weeks of supply = (Average inventory investment/Average weekly cost of goods sold)
= 1.69/.273 = 6.19 weeks

INSIGHT [latex]\blacktriangleright[/latex] We now have a standard measurement by which to evaluate a company’s continuing performance or by which to compare companies.
LEARNING EXERCISE [latex]\blacktriangleright[/latex] If Coca-Cola’s average inventory investment is $.76 billion and its average weekly cost of goods sold is $.207 billion, what is the firm’s weeks of supply? [Answer: 3.67 weeks.]
RELATED PROBLEMS [latex]\blacktriangleright[/latex] 11.6a, 11.8

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